Most urban governments in the United States face revenue problems for various reasons. Increased population size is one of the reasons why some governments experience revenue challenges. Governments have to adapt and evolve in the types of services they offer to the resident populations usually without increasing taxes to match such increases in population. For instance, the New York and Los Angeles populations have increased significantly in comparison to populations in the same cities during the 1980s. Another reason for which governments run into financial challenges is globalization and demand for more services from the increasing populations. This paper explores ways through which urban governments in the American economy can mitigate revenue problems through increasing income in ways that are acceptable to citizens and prudent reduction of services that they currently offer to their resident populations.
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One of the main ways through which urban governments in the United States can avert revenue problems is through prudent reduction of services that they currently offer. Prudent reduction of services means that state governments have to formulate ways of reducing services without compromising their objectives and obligations to their resident populations. It also means that state and country governments have to create a list of priorities and evaluate the importance of the services that they currently offer to the people in order to establish those that are essential to urban development and drop those that least affect the community’s developmental needs. In conducting such evaluation, state and county governments need to consider the impact of said services in terms of long-term and short-term effects, the community’s essential needs and the financial support that each of the services require in order to remain operational.
Prudent reduction of services
Essentially, governments in charge of urban development need to provide health care, education, employment, infrastructural, and sometimes financial services as part of their mandate to ensure that citizens have access to quality vital services at reasonable fees. One of the ways through which state governments can reduce their services prudently is by empowering the communities that they govern. This move essentially enables the community to provide services it needs without necessarily waiting for intervention from the local government.
For instance, urban governments can set up support funds for entrepreneurs looking to set up services that the governments currently provide. This method allows the government to opt out of providing the same services without compromising on the needs of residents in the urban setting (Prowse, 2003). The support funds may take the form of special grants for specific projects or loans with competitively low interest rates, thus attracting innovative methods of solving service delivery problems while generating some revenue to fund projects that the urban governments choose to follow through.
The city of Los Angeles and its adoption of urban agriculture is a good example of how urban councils and other local governments in charge of urban development can reduce the services that they provide while fostering the provision of said services from other stakeholder with an interest in the same, usually for a profit. Urban agriculture is an unorthodox form of agriculture that is popular in urban populations due to its convenience and conformity with the lifestyles that most city dwellers choose to adopt.
It comprises the essential components of agriculture such as food production, aqua culture, and animal husbandry with modifications according to the climate and space available in the setting in question (McClintock, 2010). The city of Los Angeles is famous for many reasons including modern architecture, booming entertainment business, international trade, and its population. The former three reasons have contributed significantly to the fourth reason as they attract people from all over the world to the city.
Los Angeles is one of the most populous cities in the world and second only to New York City in the United States. According to census reports in 2010, the city had a population of 3.5 million people with the exclusion of the non-resident population (Census Bureau, 2010). The city council has made policies to provide the most essential services to sustaining such a large population through ways such as lifting most zoning restrictions on buildings thus allowing for the establishment of skyscrapers that presently fill the city’s skyline. The necessity of such a move is undeniable considering the size of the population in comparison with land available for development of housing structures. However, solving the housing issue through building more dwellings has created scarcity of land for agriculture, thus causing the local government to rely on imports from other cities within the United States.
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Los Angeles residents have developed a way through which to solve the land problem by turning spaces available in buildings such as balconies and rooftops, into gardens and growing foods that do well in confined spaces, with a good example being vegetables. Although the quantity of food an individual is in a position to grow is dismal in comparison to the import amount, it provides quite a substantial amount for an individual’s consumption as a subsistence option. This aspect reduces the government’s budget for the provision of food import services as per the number of individuals growing their own food. As at 2009, there were 1.4 billion housing structures in the city, with most of them government owned (Census Bureau 2010).
Additionally, most residential areas take the form of communities with small pieces of communal land for recreational purposes. These include areas such as Leimert Park, Silver Lake, Koreatown, and Hancock Park. This element means that the government has the power over housing policies and enough influence to encourage the practice of urban agriculture as a means of reducing dependency on other cities for food and a way of reducing the government’s burden in terms of service delivery. Reducing dependency on other states for food reduces the community’s vulnerability and allows for personal growth while solving the city council’s revenue problem through reduction of services.
The second way through which the urban government can prudently cut back on service provision is through encouraging economic patriotism within the resident population. This move ensures that residents indulge in goods and services from local manufactures as opposed to those from other states thus eliminating the local government’s requirement to make provisions for import services in relation to essential goods and services. Economic patriotism entails the coordinated behavior in which particular groups of consumers or companies prefer goods and services produced in their own state or in regions within which their state participates in trade, as opposed to goods and services from other states. This concept presents various benefits to individuals as well as states and entire regions in general. One of the advantages of economic patriotism for individuals who subscribe to the concept is predictability of the quality of the products and services as well as their availability at various distribution outlets (Oliver, 2013).
Secondly, such demand creates potential for job opportunities in various sectors including the supply and distribution center for goods and service provision for service-oriented companies. Thirdly, consumers directly benefit from price discounts that come from excise duties as state governments use in a bid to encourage production and consumption of local products and services. Excise duties have the effect of reducing the production and operation price of most local products and services, thus ultimately reducing the consumer’s burden through price reduction.
Benefits of economic patriotism for individual states and regional markets exist in the form of economic development through service reduction and some amount of financial gain. Although interstate trade earns substantial income for most state and county governments in terms of tax revenue and imports while strengthening bonds among states, encouragement of local production of goods and services reduces vulnerability due to dependence on other states for the same. It also increases adaptability for urban governments, thus enabling them to cope during occasions where supply from outside sources is problematic. The ability for a state to produce its own goods and services also makes the country valuable to other states in terms of trade and it prevents such other states from taking undue advantage of a state government’s situations through unfair deals.
One of the ways in which local governments can encourage economic patriotism is through sponsorship for advertisement and price control where applicable. This aspect ensures that the relevant population is aware of the availability of target goods and services at affordable prices. Reduction of excise duties is another way for local governments to foster economic patriotism. It essentially reduces the amount of money that business owners spend in production hence encouraging more production and reducing the price burden on consumers.
Lastly, urban governments should consider short listing services that they already offer to resident communities in order to determine the most essential for improvement purposes. Most governments think about the number of services that they can offer citizens as a part of their mandate to ensure the wellbeing of the populations. However, such consideration often causes them to overlook the quality of the already existent services. As a result, the local government ends up increasing the quantity of services available without paying due consideration to the quality of such services that people need on a constant basis. The number of services fades in relevance when the authorities offer lower value for their taxes than the people need. Therefore, focusing on improving the already existent services reduces the government’s need to offer extra services to mitigate the effects of poor quality services. Improvement of present services also reduces the long-term need for such governments to provide continuous services on a long-term basis to correct deficiencies that are avoidable through proper service improvement.
Another way through which urban governments can solve their revenue problems is through increasing income. The governments need to develop plans that increase their income, and thus the ability to handle the population’s expenditure needs. This move requires urban governments to develop and evaluate strategic plans before implementing the same to ensure that the strategies they choose do not present a high risk of failure. The strategic planning process is vital because it makes the government solutions proactive and preventative as opposed to responsive and remedial.
One of the methods that urban governments can make extra income is through specialization. Specialization is a concept that mainly affects division of labor in the production process. Although the concept normally applies to companies, the same principles can apply to urban governments. In essence, the government needs to concentrate on goods and services that generate high income, are unique to the area, and produce more of those. Such goods and services represent an asset that the local government has that the rest of the states in the United States lack in terms of capacity of production.
For instance, although Los Angeles has many successful businesses dealing in goods and services in its locality, the entertainment industry sets the city apart from other states in the entire country. Similarly, New York City is famous for owning an intricate subway system. The subway system caters for its large population with enough efficiency to reduce the need for residents to own private modes of transportation. Using these examples, the city councils of New York and Los Angeles should concentrate on increasing the commercial potential of the assets and develop ways through which other states can utilize the assets.
Encouraging investment from other states is another method that urban governments in the United States can apply in order to increase their revenue. Although the approach is usually applicable at the national level, it works just as well at the state level. City councils should develop policies that encourage investment in capital assets within their territorial borders in order to attract more tax revenue without increasing the tax burden on local residents. In most instances, tax revenue forms the main source of income for governments regardless of their level in the national ranking. By formulating policies that encourage investment, local governments attract revenue from investors within and outside their own states, subsequently enabling them to cater for the needs of their populations more effectively.
The third method of increasing revenue for local urban governments in the United States’ urban settlements is the reduction of import duty. The traditional perspective behind the reduction of import duties is that it reduces the sum amount of tax revenue that a state can collect from transactions that importers conduct with state authorities, in compliance with rules of engagement for business set-ups in different states. Although this perspective bears truth to the conclusion, it overlooks the potential of increased numbers for companies looking to provide goods and services for such states. By reducing the import duties, city councils attract more businesses to their area of operations perhaps more than standard level taxation would attract.
The profit in this scenario lies in the numbers as opposed to the amount (Blackburn et al., 2012). This move is also advantageous to the resident populations of cities that choose to reduce import duties as it increases competition for similar goods and services. Although such competition may prove hectic to business people, it breaks monopolies and causes a reduction in prices for certain goods and services for consumers. It also ensures that manufacturers and businesspersons engaging in the sale of services improve the quality of their products in order to remain relevant in the market, thus meeting the populations’ demands without government involvement in the distribution and consumption processes.
Although revenue problems are common in most cities in the United States, it is up to the governments in various states to formulate methods through which they can reduce services that they offer and increase revenue while maintaining sustainability in their economies. The methods above only provide part of the possible solutions available to state governments for the improvement of their revenue situations.
Blackburn, K., Bose, N., & Capasso, S. (2012). Tax evasion, the underground economy and financial development. Journal of Economic Behavior & Organization, 83(2), 243-253.
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Census Bureau. (2010). Statistical Abstract of the United States (129th ed.). Washington, D.C: US Census Bureau.
Helleiner, E., & Pickel, A. (2005). Economic Nationalism in a Globalizing world. New York, NY: Cornell University Press.
McClintock, N. (2010). Why farm the city? Theorizing urban agriculture through a lens of metabolic rift. Cambridge J Regions Econ Soc, 3(2), 171-175.
Oliver, A. (2013). From Nudging to Budging: Using Behavioral Economics to Inform Public Sector Policy. Journal of Social Policy, 42(4), 685-700.
Prowse, M. (2003). Toward a Clearer Understanding of Vulnerability in Relation to Chronic Poverty. Web.